Externalities: Pigouvian taxes

Print section Print Rubric:  Arthur Pigou thought that taxes could solve a common market failure. The fourth brief in our series on big economic ideas Print Headline:  The lives of others Print Fly Title:  Externalities UK Only Article:  standard article Issue:  How Trump has a feeble grasp of what it means to be president Fly Title:  Externalities Main image:  20170819_BBD001_0.jpg LOUD conversation in a train carriage that makes concentration impossible for fellow-passengers. A farmer spraying weedkiller that destroys his neighbour's crop. Motorists whose idling cars spew fumes into the air, polluting the atmosphere for everyone. Such behaviour might be considered thoughtless, anti-social or even immoral. For economists these spillovers are a problem to be solved. Markets are supposed to organise activity in a way that leaves everyone better off. But the ...

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